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Director of Global Sued for Defaulting on Loan

J.P. Morgan accuses Lodwrick Cook of benefiting from the firm's bankruptcy.

April 18, 2003|James F. Peltz | Times Staff Writer

Lodwrick M. Cook, who made tens of millions of dollars as the chairman of Atlantic Richfield Co. and the co-chairman of Global Crossing Ltd., is being sued by a New York bank for failing to repay a $7.5-million personal loan.

Cook, 74, defaulted on a letter of credit and is trying to use Global Crossing's bankruptcy filing "to avoid his obligation to repay the millions of dollars loaned to him that he rightfully owes to others," according to the suit filed by J.P. Morgan Chase & Co., the bank that backed the loan.

The suit was filed this week in federal court in New York.

Cook, a longtime Los Angeles civic booster and philanthropist, could not be reached for comment Thursday. Global Crossing spokeswoman Tisha Kresler declined to comment.

Cook was chairman and chief executive of oil giant Arco, now owned by BP of Britain, from 1986 to 1995. One of Global Crossing's original directors, Cook joined with its founder Gary Winnick in rapidly building the company into a leading provider of fiber-optic networks for the telecommunications industry.

Though it was based in Bermuda, Global Crossing's nerve center was Beverly Hills, where Winnick and his team had their executive offices.

The company collapsed under $12.4 billion of debt, and it filed one of the largest bankruptcy reorganization peti- tions in U.S. history in January 2002.

With Global Crossing's share price falling, the company's board agreed to extend loan guarantees to senior executives and directors to help them avoid selling stock to pay debts, the lawsuit says.

It says Cook took out the loan that J.P. Morgan backed because he needed money to cover another, $14-million loan.

Before the bankruptcy filing, Cook netted more than $35 million from selling the company's stock, according to filings with the Securities and Exchange Commission. Other company directors and executives also made millions of dollars from selling shares.

According to the suit, Cook claimed that he could not use some of his other assets, including a Las Vegas driving range and an expected $2.4-million federal tax refund, to cover the larger loan.

The suit claims that Cook failed to repay the loan by July 5 as required. Global Crossing, in a government filing in October, disclosed Cook's loan and noted then that "the loan matured and Mr. Cook failed to pay."

J.P. Morgan is seeking repayment of the loan plus unspecified interest.

Cook has had a high profile in Los Angeles for nearly two decades.

After the Los Angeles Public Library was struck by two arson fires in 1986, he headed the $10-million Save the Books restoration campaign. And after the riots in 1992, he was a prominent participant in the city's rebuilding efforts.

He joined Global Crossing in 1997 and eventually became the company's co-chairman. He resigned that post at the end of last year -- when Winnick resigned as co-chairman -- but remained a director.

Cook also is a trustee of the George Bush Presidential Library Foundation and former chairman of the Ronald Reagan Presidential Foundation, according to Global Crossing's Web site.

A judge approved Global Crossing's reorganization plan in December, and the company expects to emerge from bankruptcy proceedings sometime this year.

Times wire services were used in compiling this report.

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